(Reuters) - Canadian retailer Hudson’s Bay Co (HBC) said on Friday it reached an agreement with shareholder Land & Buildings, under which the activist investor would withdraw its appeal against the conditional approval given for an investment by Rhone Capital.

HBC, which owns the upscale Saks Fifth Avenue department store brand, in October received a $500 million investment from private equity firm Rhone in the form of eight-year mandatory convertible preferred shares. Land & Buildings head Jonathan Litt said the investment was not in the best interests of minority shareholders.

The agreement signals easing tensions between the company and its most vocal investor since that deal was announced, when Litt sought to prevent a final approval of the deal by the Toronto Stock Exchange, saying it wasn’t in the best interests of minor and HBC accused Land & Buildings of misleading investors.

Hudson’s Bay shares on Friday jumped as much as 2.6 percent to a 2-1/2-week high, and closed up 1.3 percent at C$11.46, while the S&P 500 retail index fell 0.5 percent.

As a concession to Litt, the Toronto-based company said that if it issues new shares in a way that triggers a price protection feature available to Rhone for a year as part of the deal, it would do the issuance as a rights offering accessible to all its investors on a pro rata basis.

Hudson’s Bay said Land & Buildings has provided a “customary standstill in favor of HBC” until the department store company’s annual shareholder meeting in June. That agreement will essentially prevent Litt from publicly agitating against HBC until the shareholder meeting, a Land & Buildings spokesman said.

Land & Buildings, which owns about 5 percent of HBC, has been pushing the department store operator to monetize its real estate and sell its Saks Fifth Avenue store in Manhattan and move away from a brutal retail market.

Reporting by Nichola Saminather in Toronto and Yashaswini Swamynathan in Bengaluru; additional reporting by Carl O'Donnell; Editing by Anil D'Silva and Jonathan Oatis